How to reimagine professional services for the digital age

Changing workplace: AI and machine learning means there are new opportunities to increase margins Credit:
Getty

29 June 2018 • 10:30am

Chris Price

In the face of increasing automation, accountancy and law firms need to look comprehensively at new areas in which they can add value

Professional services firms in sectors such as accounting, consultancy and legal services have grown significantly in recent years, recruiting highly skilled talent to meet the needs of clients. With new technologies such as artificial intelligence (AI) and machine learning, there are now opportunities to shift to higher-value-added work and increase business margins.

“Clients are becoming more sophisticated, especially around price sensitivity,” said Christine Ashton, global chief digital officer at SAP, at a roundtable hosted by the tech giant at the Telegraph Leaders of Transformation conference on 6 June. “We are starting to see new business models emerge where clients only pay for what they use and rent rather than buy assets.”

One key area for unlocking greater value in the professional services sector is the intersection of tech and people. For example, many firms have trimmed staff levels, hiring contingent or contract workers project by project. “We’re fast approaching 50pc of our workforce becoming contingent,” said Paul Bray, partner in accountancy firm Deloitte – a situation “that would have been anathema even two years ago”. Where full-time manpower may have been reduced, however, there has been an equivalent investment in technology.

Companies are increasingly automating task-based processes to allow highly skilled staff to work on where they can add value without billing hours on administration or data input. Ms Ashton said: “By leveraging new cloud-based technology, businesses can see how they can release staff from work that is both boring and error-prone.”

Neil Patel, IT director of investment firm Apax Partners, said that his business had seen a number of “quick wins" with RPA [robotic process automation] in the professional services sector in general, noting certain businesses "using invoice automation software and chatbots to handle some investor queries”.

SAP, as an enterprise software provider, already offers a number of services that use AI, including intelligent assistants to provide information about customers and predictive analytics solutions that can determine which projects are likely to go well.

But not all technology is about replacing manual work, and as consultancies seek to add value and insight to their clients they are themselves turning to technology to do the same for their own business.

Chris Mulligan, strategic growth director of design and engineering consultancy Atkins, said that the construction sector as a whole is a bit of a laggard about technology. “We are much closer to the start of digital transformation than others are,” he said. Mr Mulligan added that Atkins had introduced a regular Monday morning video conference held between its top 300 staff in each of its three divisions, using technology to co-ordinate an otherwise impossible delegation of staff in different locations to “share client and operational intelligence, innovations and the lessons learned from delivering projects”.

Indeed, Tony Scott, former chief information officer of engineering professional services firm WSP, said that when it came to digital transformation more generally “it’s all about people and not so much about technology”. The danger was that, by driving costs down and focusing on the short-term benefits that automation could bring “there is simply a race to the bottom. That’s why we need to be exploring new business models where we can add value, because the current business model isn’t going to survive.”

He felt that, as the model for consultancy changed, companies would need to adapt, be brave and give away some of their core skills and expertise free to find new business models in other areas such as digital asset management.

The question posed by Axel Koelsch, chief operating officer of law firm Addleshaw Goddard, was whether professional services’ business models could even exist post digitalisation where the business models were based on outcome rather than necessarily hours worked. “If you digitally transform it’s no longer about highly gifted individuals who hold a special knowledge, but just about making it a commodity.”

For example, it is now possible to buy off-the-shelf contracts online with a range of variables – and all without the involvement of lawyers.

As new technologies such as AI become more widespread, they could be used to determine which sections of the contract are likely to require further negotiation and those that do not – becoming smarter than even the most experienced consultant.

Full replacement of the skills that made consultancies so valuable is unlikely and instead we should expect to see humans supported by technology in their roles. David Royle, partner of the auditing firm Grant Thornton, said: “We’ve seen a shift away from anxiety towards generating new ideas that will help drive the business forward.” The delegates suggested that embracing the opportunities to leverage technology would be increasingly a differentiator among consultancies. As business models have been adapted to new demands from clients and access to new technology, that meant one thing, according to Ms Ashton, who said: “Companies also need to identify the things that they need to do as well as their competitors and those things that they need to do much better than them.”